GDT slump damper for dairy farm freedom
Irish farmers got a taste of the volatility to come, when the average product price slumped 10.8% in the GlobalDairyTrade auction for internationally traded commodity dairy products.
It’s the second of seven GDT auctions in which dairy product prices decreased, following a mini-recovery in world milk prices since early February.
The GDT index, an important measure of global dairy prices, is now about one third behind its level of 12 months previously.
Yesterday’s auction resulted in price falls for all commodities, of 7.6% for butter, 10.5% for cheddar cheese, and 9.9% for skim milk powder.
For whole milk powder, one of the most important products for Fonterra, the price fell 13.3%, despite new projections that the very dry summer in most regions will reduce New Zealand’s annual milk supplies 2.1% compared to last year.
However, market swings come as no surprise to Irish dairy farmers, who are excited at the prospect of growing milk production, and running their farms better without counter-productive milk quota impositions, said IFA Dairy Committee Chairman Sean O’Leary this week.
ICMSA President John Comer said the success or failure of Irish post-quota milk production rests completely on the ability and willingness of Irish processors to pay a milk price commensurate with the effort and investments made by their farmer-suppliers, who are entitled to at least as much reward as every other link in the chain to the consumer.
Milk suppliers are now free to produce as much milk as their farms and ambitions will allow, said James Lynch, chairman of Dairygold Co-op, which this week reported a €27.2m operating profit for 2014.
Analysts at Rabobank have highlighted Ireland’s capacity to produce more than nine tonnes of grass dry matter per hectare — whereas the rest of Europe cannot — as a distinct advantage in Ireland’s bid to capitalise on an expected increase by 2.4% annual increase in global dairy demand.
Taoiseach Enda Kenny TD has described yesterday’s end of EU milk quotas as ‘an important strategic development’ in the Government’s work to secure economic recovery. At the recent opening of the Glanbia Ingredients Ireland Belview plant, the Taoiseach said, “2015 will be the year of rural recovery because of developments like the one being announced today.
Agriculture Minister Simon Coveney said, “Quota abolition means the potential for increased employment, with Teagasc estimating that it could create 15,000 new jobs over the next five years. I believe that quota abolition will work for Ireland because we produce milk in a way that is competitive on global markets and built on a natural, environmentally sustainable production model built on grass.”
EU milk quota removal was marked this week also by the Irish Dairy Board, Ireland’s largest exporter of Irish dairy products, unveiling its new global corporate identity, Ornua – The Home of Irish Dairy. Over the past five years, Ornua has been transforming its business in preparation for the removal of milk quotas and a new era for Irish dairying.
